Mathematics Homework

Annual Insurance

Amount:

Annual Property Taxes

Amount:

III. Calculations—

Round all values the nearest cent (Two Decimal Places).

Make sure to SHOW WORK on parts b) – f).

a) Sale Price of Property (2 points): ___________________________

b) Find the required down payment (3 points).

c) Find the amount of the mortgage (3 points).

d) How much must be paid for points at closing (3 points)?

e) Find the monthly payment (excluding property taxes and insurance) (5

points).

PMT= P(r/n)/(1-(1+r/n)-nt) f) Find the total interest paid over the timeframe of the loan (4 points).

IV. Calculate your ACTUAL Monthly Payment (Including Insurance &

Taxes)

a) Monthly Insurance Payment (1 Point)

How much is the annual insurance amount (look at instructor information

given)? _______________________

Monthly Insurance Payment = Annual Insurance 𝐴𝑛𝑛𝑢𝑎𝑙 𝐼𝑛𝑠𝑢𝑟𝑎𝑛𝑐𝑒

12

Monthly Insurance Amount: $________________________

b) Monthly Escrow for Property Taxes (1 Point)

How much is the annual property taxes (look at instructor information given)?

_____________________

Monthly Escrow (Taxes) = 𝐴𝑛𝑛𝑢𝑎𝑙 𝑃𝑟𝑜𝑝𝑒𝑟𝑡𝑦 𝑇𝑎𝑥𝑒𝑠

12

Monthly Escrow for Taxes: $______________________

c) Actual Monthly Payment (2 points)

Add together:

• Monthly Mortgage (Principal + Interest)

• Monthly Insurance Payment

• Monthly Escrow Tax Payment Actual Monthly Payment: $________________________

V. Conclusion Questions

1. Principal vs. Interest Over Time (5 Points)

Describe what happens to the portion of payment going to principal and

interest over the life of a mortgage.

__________________________________________________________________________________________

__________________________________________________________________________________________

2. Shorter Loan Time (New Monthly Payments) (7 Points)

Recalculate your new monthly payment if you were to cut the loan time by 5

years

• Example: If original loan time was 20 years, recalculate your monthly

payment where t = 15.

• Use the same mortgage amount and interest rate, but the shorter time

frame.

New Monthly Payment: $_____________________

3. Comparing Monthly Payments & Total Interest

a) Difference in Monthly Payments (5 Points)

Find the difference between the original monthly payment and the new

shorter-term monthly payment.

Difference = Larger Monthly Payment – Smaller Monthly Payment Difference in Monthly Payment: $________________

b) Difference in Total Interest (8 Points)

1. Find the total interest paid using the new monthly payment and shorter

loan time.

2. Subtract that from the total interest found in Part III, f).

Difference in Total Interest = Original Total Interest – New Total Interest

Difference in Total Interest Paid: $____________________

4. Your Personal Choice & Lifestyle impact (10 points)

Which loan time frame would YOU choose? How would choosing that time

frame impact YOUR lifestyle.